According to CLSA’s prediction, the share price of this prominent automobile manufacturer, specialising in two-wheelers and three-wheelers, could drop to Rs.7,000 per share, representing a 40 percent decline.
Share Price Variation
In Wednesday’s trading session, Bajaj Auto Ltd share price is trading at Rs.11,940.9 per share, 0.08 percent down from its previous close of Rs.11,944.25 apiece.
What happened
A prominent brokerage and investment firm CLSA has maintained its “underperform” rating on Bajaj Auto Ltd. and anticipates the stock may drop to Rs.7,000 per share.
CLSA’s price target suggests a potential downside of over 40 percent from Bajaj Auto’s current market price.
The brokerage firm believes Bajaj Auto remains cautious due to heightened competition in the premium motorcycle segment, moderated growth in motorcycles over 250 cc, and ongoing challenges in key export markets.
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Bajaj Auto is facing increased competition in the premium motorcycle sector, notably from competitors like TVS and several international brands. This competitive strain is amplified by a broader trend of slowed growth in motorcycles exceeding 250 cc.
The company has observed that while demand for lower-capacity motorcycles remains steady, the premium segment is seeing slower growth due to market saturation and a wider range of options for consumers.
Exports are a significant component of Bajaj Auto’s business model, making up approximately 40.9 percent of its total sales in FY23. However, the company has experienced a notable decline in export volumes, which fell to 33.2 percent in FY24.
FY2024 was challenging for exports. During this period, the company sold 1.64 million vehicles, down from 1.82 million vehicles the previous year.
Recent Developments
Bajaj Auto and Triumph have launched two new entry-level motorcycles, the Speed T4 and the MY25 Speed 400, with the Speed 400 as the basis for the Triumph brand.
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CLSA notes that the Speed T4 stands out with its excellent performance, power specifications, and a competitive price of Rs.2.17 lakh. In FY2024, Bajaj Auto delivered around 60,000 Triumph motorcycles, reflecting strong market presence.
Financial Performance
In its latest financial update, Bajaj Auto reported a net profit of Rs.1,942 crore for Q1 FY25, an 18 percent increase from Rs.1,644 crore in Q1 FY24. Revenue from operations rose to Rs.11,932 crore, up from Rs.10,312 crore, marking a 16 percent increase year-over-year.
Company Profile
Bajaj Auto is a prominent Indian manufacturer specialising in motorcycles and three-wheelers, and it stands as the largest exporter in its field, operating in over 70 countries. Part of the Bajaj Group, the company focuses on innovation in electric vehicles and advanced motorcycle technology.
Written by – Siddesh S Raskar
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